The Influence of the Freelance Economy

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With the Internet, freelancing has become easier than ever to get into. For a long time, independent contract workers were limited to finding clients within a certain geographic radius, allowing them to perform work onsite or at least nearby. But there is more demand now than ever for freelance work given the ease of communication and the transfer of information, product, and payment via digital means. So anyone looking to try a new career path or earn their full living on a freelance basis has a wealth of opportunity and options at their fingertips. And it’s making a real impact on the larger business economy.

The freelance economy is all about work on demand – instead of waiting to fill a staffing need until there is enough work to justify hiring a full time employee, companies can pull in a contractor to execute a task or project immediately. Also, instead of hiring a full-time employee who will likely have downtime while still getting paid, hiring freelancers ensures that companies are only paying for work actually being performed.

A salaried employee has job security, but perhaps less motivation to produce top quality work. As we know, it can be easy even for typically engaged employees to fall into the trap of doing just enough to keep their jobs, especially when their pay is regular and guaranteed.

Freelancers, on the other hand, have to perform up to standards in order to get hired, get paid and keep return clients. Their money and livelihood depends on quality results every time. Does that mean you can always trust a freelancer to do a better job than a full-timer? No, but it does mean that there is greater incentive for a contractor to go above and beyond to impress a client; hence there are both cost and performance management incentive for an employer to hire a freelancer rather than an employee.

Not to mention, the broadening of the freelancer space due to globalization and wider access via the Internet means that competition among freelancers is stronger. That also provides incentives to excellence, as well as more competitive pricing for employers.

Perhaps that concept is behind the massive shift in recent years toward freelancing. It is estimated that the majority of the U.S. workforce will be freelance in less than ten years. Not only does this model provide the workers with a level of autonomy and independence that they don’t have as a full time employee; it also provides employers with the confidence that they’re not paying for non-productive time and that the end product will be satisfactory, if not outstanding.

Another interesting phenomenon brought on by the expansion of the freelance economy is the worker trend toward generalizing over specializing. According to the 2017 Freelancing in America report, 55 percent of freelancers participated in skill-related education in the last six months, compared just 30 percent of non-freelancers.

In the traditional employment space, a person typically starts at entry level and learns over time what they want their specialty to be, and then spends years honing that particular skillset, to be the best at what they do. And while that is an admirable path to take, these days, employers are looking for more flexibility.

Startups, with their limited budgets and eyes toward expansion, often need their employees to wear multiple hats in order to meet their current needs and support their growth goals. A startup who hires a graphic designer might also need that person to handle editing, layout and publishing in order to put out their content. In that instance, the best graphic designer in the world may not be able to meet the needs of this small company. A freelance graphic designer, on the other hand, who is looking for ways to stand out from the competition, is probably more likely to have already added those skills to her resume and would then be a better fit for the engagement, even if her experience is not as deep.

Further, this emphasis on multiple complementary skills can be a driver for freelancers to eventually start their own successful businesses and add to the economy. A freelancer who has spent years not only honing their specialty but other supplemental skills as well has the ability to offer a more complete service package upon which a more established business might be built.

Freelancers in general have the ability to work outside the traditional paths to success. Instead of having a business idea and then searching for investors or funding to get it off the ground (which may or may not happen,) they can simply create a profile on a freelancer site and start working and building client relationships and a portfolio. Eventually they can translate that into an incorporated business if they so desire.

On top of businesses created by freelancers, the economy is also being impacted by the business sectors created to support freelancing. You have the freelance platforms like Fiverr, Upwork, Remote.com, etc. that have been around for a while, but now there are niche networks designed to focus on specific industries, as well as “elite” networks that focus on high paying, highly specialized gig work.

There are also business models popping up that are geared toward the freelancer; for instance, marketing or financial services that cater to the needs and price points of a single person working independently, and mobile applications that give freelancers access to CRM capabilities or workflow tools.

As freelancing quickly grows as an economy, entrepreneurs and innovators are finding gaps in the market and creating technology and services that make it a more accessible and attractive option. Consider how Uber created a simple app that made it easy for anyone to jump right into a side gig and for some, eventually turn it into a full time career. The technology capabilities of today make it possible for a single person to handle the work of a whole business, no matter what industry they’re in.

Ultimately, the freelance economy is making a major impact on the larger business economy not just by creating new revenue streams but also by changing the way we think about employment. The shift toward freelancing is making space for non-traditional business models, new innovations and creative paths to success. It may not be as stable as a full-time engagement, at least not at first, but it can be a great way to build your skills, explore your creativity and earn a living on your own terms.

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